Harry spent $39,000 in 2009 and $42,000 in 2014 on goods and services. The consumer price index was 220 for 2009 and 231 for 2014. Harry’s 2009 spending in 2014 dollars is about?

= $40,950

Explanation:

The consumer price index is used to measure the rate of inflation and increase in price level over a period of  time.

A change in price index from 220 to 231 indicate an inflation rate of 5%

Therefore, year 2009 spending of $39,000 in 2014 dollars will equal

= 231/220  × 39,000

= $40,950

Year 2009 spending of $39,000 in 2014 dollars =$40,950

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